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This publication is a product of the National Security Agency 
history program. It presents a historical perspective for informational 
and educational purposes, is the result of independent research, and 
does not necessarily reflect a position of NSA/CSS or any other U.S. 
government entity. 

This publication is distributed free by the National Security 
Agency. If you would like additional copies, please email your request 
to history@nsa.gov or write to: 

Center for Cryptologic History 
National Security Agency 
9800 Savage Road, Suite 6886 
Fort George G. Meade, MD 20755-6886 


David Mowry served as a historian, researching and 
writing histories in the Cryptologic History Series. He 
began his Agency career as a linguist in 1957 and later 
(1964-1969) held positions as a linguist and cryptanalyst. 
From 1969 through 1981 he served in various technical 
and managerial positions. In the latter part of his career, he 
was a historian in the Center for Cryptologic History. Mr. 
Mowry held a BA with regional group major in Germany 
and Central Europe from the University of California at 
Berkeley. He passed away in 2005. 


Cover: The U.S. Coast Guard 75-ft. patrol boat CG-262 towing into 
San Francisco Harbor her prizes, the tug ELCISCO and barge 
Redwood City, seized for violation of U.S. Customs laws, in 1927. 
From Rum War: The U.S. Coast Guard and Prohibition. 





Listening tc the 
Rumrunners: 

Radio Intelligence 
during Prohibition 


David P. Mowry 



Center for Cryptologic History 
Second edition 2014 





A motorboat makes contact with the liquor-smuggling British 
schooner Katherine off the New Jersey coast, 1923. 
(Photo courtesy U.S. Coast Guard) 


Foreword 


^ A ost Americans are aware of the era of lawlessness in 
this country that began with the passage of the Eigh- 
/ ▼ ^^teenth Amendment to the Constitution in 1919. The 
institution of Prohibition brought with it major law enforcement 
problems, whose effects continue to be felt today. Few people, how¬ 
ever, are aware of the major role played by communications intel¬ 
ligence in the enforcement of the Prohibition laws. The files of the 
United States Coast Guard (USCG) and the Federal Communica¬ 
tions Commission (FCC), including the files of the Radio Division 
of the Department of Commerce, show that radio was used on a large 
scale in connection with rum-running activities. The radio opera¬ 
tions of the rum-running organizations were, in fact, comparable in 
size, technical skill, and organization with the radio operation that 
would be conducted by enemy agents in World War II. 


3 












The Beginning 


C y the year 1924, five years after the beginning of the Great 
Experiment in America, defiance of the Prohibition laws 
had grown to such proportions that Congress appropriated 
$13,852,980 just to expand the U.S. Coast Guard for the purpose of 
enforcement. Intelligence operations against the rumrunners were thus 
a harbinger of what might be expected in the event the United States 
became involved in war on an international scale; and the experience 
gained between 1919 and 1935 was to prove of great value after 1940. 1 


During World War I the science of long-distance radio transmis¬ 
sion was effectively unexplored except for certain techniques known 
only to a handful of scientists and engineers. Radio equipment was 
bulky and difficult to obtain, and antenna installations were so con¬ 
spicuous that any station capable of transoceanic communication could 
have been tracked down by normal police methods. It was not until 
shortwave communications became feasible and the invention of the 
vacuum tube made small transmitters possible that clandestine radio 
communications became a serious danger. Such equipment became a 
practical reality in the 1920s and was immediately adopted by criminals 
for various purposes. The first instance of an illegal transmitter small 
enough to be concealed on a persons body was recorded in 1928, when 
a tipster was apprehended at Laurel Race Track in Laurel, Maryland, 
with his vest pockets full of equipment and his body girded with wire. 2 

The origins of the use of radio intercept in enforcing the Pro¬ 
hibition laws are obscure. In a letter written in 1934, Commander 
Stephen S. Yeandle, U.S. Coast Guard Intelligence Officer, Eastern 
Area, stated that he believed he was the first to use radio in obtaining 
intelligence while he was in command of a destroyer division operat¬ 
ing offshore. His operators intercepted illegal radio traffic, and two 
of his officers developed considerable proficiency in breaking codes 
and ciphers. Yeandle said that this was prior to the establishment of 
the unit of the Coast Guard specializing in this work. 3 


Unlicensed radio station transmissions onshore frequently inter¬ 
fered with local radio reception. The Radio Division of the Depart¬ 
ment of Commerce, which was charged with the supervision of radio 


4 



The Mary, a typical contact boat. The 43-footer was 
powered with a 100-hp motor. (Source unknown) 


communications in the United States, could do little about these unli¬ 
censed transmitters, as it was limited to inspecting only licensed sta¬ 
tions, and its investigators had no police authority. The Coast Guard, 
however, as an arm of the Treasury Department, had been tasked 
with enforcement of the Prohibition laws; and Commander Charles 
S. Root, the Intelligence Officer of the Coast Guard, was sure that 
many of the unlicensed stations were connected with rum-running. 4 

By 1925 the overall structure of international liquor-smuggling 
operations had assumed the form which characterized it until Repeal. 
The major sources of illicit liquor were British Columbia and Mexico 
for the West Coast; and Nova Scotia, British Honduras, and the West 
Indies for the East Coast. Smuggler ships would take on legal cargoes 
of spirits in these countries, with the cargo manifested for a country 
where liquor importation was legal. The ships would then proceed to 
a prearranged rendezvous point and transfer the cargo to high-speed 
“contact boats” which would ferry the liquor ashore. Since the rendez¬ 
vous points were outside U.S. territorial waters, defined in this case as 
extending either twelve miles or “one hour’s sail” from the coastline, the 
smuggling vessels sitting in this “Rum-Row” could not be seized by the 
Coast Guard, but could be, and were, regularly harassed by them. 


5 









“Radio New York” 


C n 13 October 1925, Mr. Robert J. Iversen, of New York 
City, wrote a letter to Commander Root, discussing the 
establishment of an intercept site in New York City. 5 At 
the time, Iversen was employed at the New York Times Radio Sta¬ 
tion on West 43rd Street. In this letter, obviously not the first on the 
subject, Iversen told Root to send equipment either to the Times or to 
his (Iversen’s) home address on Long Island and reported the “lists of 
materials for high power had been submitted to various manufactur¬ 
ers for bids and would be purchased through the Times ."Iversen esti¬ 
mated that he would need a $500 advance for the first two months, 
after which $150 per month would be satisfactory. He also informed 
Root that he had located two radio operators. One was a Canadian 
employed by RCA Corporation on its ship station at Chatham, Mas¬ 
sachusetts, and the other (also a resident alien) had experience in ship 
operation and “high power” and had satisfied all requirements for 
American citizenship but had not taken out final papers. 

Root instructed Iversen to determine if the second man could 
get his citizenship papers right away. If this were possible, Root 
could have the man ordered immediately to Washington to be 
sworn into the Coast Guard. It would, however, be impossible to 
commission an alien into Iversen’s service. With regard to the ship¬ 
ment of equipment, Root predicted that it would be sent by 17 or 
18 October. 

Iversen moved his base of operations on 16 October 1925 and 
began collecting with two receivers: one, a low-frequency receiver 
designed to collect signals in the 20 to 200 kHz range and the other, 
a medium-frequency receiver covering 300 to 750 kHz. On 18 Octo¬ 
ber, he managed to pick up an exchange between the Coast Guard 
station at Rockaway, New York, and the Coast Guard cutter Mojave. 
The same day he told Root that he was borrowing a 200-1000 kHz 
receiver from the Times and was having an amplifier constructed so 
that this receiver could be put on speaker watch on the 600 kHz 
London-New York commercial circuit. Construction of a new long¬ 
wave receiver to collect London-New York traffic was also being 


6 



Listening to radio traffic (source unknown; probably 1920s) 

pushed. The first batch of traffic from the site was sent to Root on 23 
October and consisted of ten messages, all international commercial 
plain text, mostly in English. 

In the meantime, Iversen had found another possible operator 
for whom Root forwarded the necessary application forms. Since 
RCA, the man’s employer, would undoubtedly try to find out where 
and for whom the man was working and the type of work he was 
doing, Iversen had not told him that the job was a government one. 
Root agreed with this precaution and suggested that the man should 
always be paid by Iversen, in cash. Iversen was not particularly happy 
with this arrangement, as he wanted the ultimate responsibility for 
the activity to devolve upon the Coast Guard. 

At the end of October, Iversen received an official appointment 
from the Coast Guard. He was still constructing the long-wave set 
which he intended to use to cover the London-New York commer¬ 
cial circuit. He had, however, completed the recorder he intended 


7 







to use in conjunction with this receiver. The latter would allow him 
to let the long-wave receiver run unattended while he was inter¬ 
cepting traffic on another receiver. On 3 November, Root shipped a 
medium-wave receiver to him, billed as coming from a W. W. Reyn¬ 
olds in Washington, DC. The long-wave receiver was completed on 
9 November, and testing started that night. Iversen had quoted a 
price for the construction of this receiver, with recorder: 11,000. In 
fact, the entire installation, including the radio equipment, furniture, 
and all other expenses incurred in starting operations, cost less than 
$1,000. Tests of the long-wave equipment proved satisfactory, and, 
after considerable red tape, Iversen was informed that Reeves, the 
RCA radioman, would be hired on 19 November. Collection empha¬ 
sis was on international commercial circuits, although Iversen did 
ask Root what “enemy ships” were in his territory (i.e., Cape Cod to 
Cape May) and which ones had antennas on board. 

By modern standards security seems to have been fairly lax at 
“Radio New York,” as the operation was titled by Root. Communica¬ 
tions between New York and Washington were by mail and, during 
the first month or so, the extent of security consciousness seems to 
have been exemplified by the refusal to hire an alien (at least until 
he had been naturalized) and the provision of an alternate mailing 
address. (Iversen had suggested improving security by having Root 
send part of his correspondence via Iversen’s wife, Helen.) Toward the 
end of November, Iversen and Root started addressing one another 
intermittently as “2002” and “1000,” respectively. Iversen asked for 
some official government envelopes since he was unable to put his 
name on envelopes containing intercept being sent to Root. He was 
particularly worried about RCA acquiring one of the envelopes, 
as its international circuits were the primary intercept targets. He 
informed Root on the same day that a telephone had been installed 
in the station and that the number was being forwarded separately. 
With regard to the mail, Root suggested sending intercept via regis¬ 
tered mail using the return address of one Charles Gordon, who had 
offices in the Equitable Building (New York City). However, Root 
wanted this address used only on registered mail: he did not want 
Gordon’s name connected with the Intelligence Office. 


8 


Murphy, the resident alien, 
had been naturalized in Novem¬ 
ber, but the paperwork on his 
loyalty oath had been delayed, 
and this delayed his hiring. On 
2 December Reeves resigned 
but remained on board until the 
end of the month. Apparently 
he resigned because his wife 
would not move and he didn’t 
like the commute. He intended 
to return to RCA and promised 
Iversen that he would work for 
Radio New York’s interests there. 

Iversen started looking for a 
replacement—unmarried. 

Radio New York’s first rum¬ 
runner intercept was apparently 
accomplished on 4 December 
with the copy of a message from the SS Copeman to its principals in 
Cardiff, Wales, announcing its arrival date. The Copeman had been 
formerly known as the SS Avontown and had, under that name, 
been a rumrunner. As a result of this intercept, the Coast Guard was 
able to estimate the ship’s location at 40°N 73°W. Root immediately 
ordered Iversen to monitor its frequency continuously and forward 
intercept by Special Delivery since the Copeman ’s cipher was readable 
and analysis could lead to the discovery of her shore connection. 

With the intercept from the Copeman, everything began to fall 
into place, and Radio New York began to collect a considerable quan¬ 
tity of rumrunner traffic from schooners outside the territorial waters 
of the United States. In addition to this collection, the 600 kHz com¬ 
mercial circuit between London and New York was being monitored; 
the rumrunner I’m Alone (about which more will be said later) was 
copied on 23 December; and on 26 December Root suggested that 
Iversen try to intercept stations on St. Pierre et Miquelon (off the 
southern coast of Newfoundland), which had both radio and cable 


Radio New York 
began to collect 
a considerable 
quantity of rum¬ 
runner traffic 
from schooners 
outside U.S. 
territorial waters. 


9 



communications and was a major source of liquor. During the entire 
month of December, Iversen was supplied with considerable infor¬ 
mation concerning the identities of ships in Rum Row together with 
descriptions of their radio antennas. 

At the end of the year, Iversen was notified that Root was going 
on leave. Root had made provision for feedback. Upon his return he 
was promoted and transferred. Iversen continued to supply intercept, 
but he complained to Root in a personal letter on 2 March 1926 
that he had received no feedback. Root answered that he himself 
had received practically no information since their “original arrange¬ 
ment was brought to an end” but that he thought that would change. 
It is interesting to note that, with the change of command, Iversen 
was instructed to cease sending his traffic to Washington. His new 
instructions were to deliver it to a “decoder” in New York, apparently 
Victor Weiskopf of the Justice Department, who was a part-time 
member of Herbert O. Yardley’s MI-8 staff, the famous “American 
Black Chamber” of World War I, which continued in operation in 
New York City until 1929. 


10 


Coast Guard Collaboration 
with Other Agencies 

T he Coast Guard was not the only U.S. government agency 
involved in the rum war. There was cooperation among the 
Bureau of Prohibition, the Federal Bureau of Investigation 
(FBI), the Bureau of Customs, and the Department of Commerce. 
Of these, the Radio Division of the Department of Commerce, the 
FBI, and, until at least 1930, the Bureau of Customs were involved in 
radio intercept. In addition, MI-8 and the infant Signal Intelligence 
Service (SIS) of the War Department provided some cryptanalytic 
assistance to the Coast Guard, although SIS interest was primarily in 
using solved systems as training problems. 6 

One of the more prominent individuals involved in intercept 
operations against the rumrunners was Forest F. Redfern of the 
Radio Division of the Department of Commerce. According to a 
19 October 1929 article in the New York World\ Redfern’s involve¬ 
ment with radio had started in 1912 when his brother Otto, a former 
supervisor with the Radio Division, taught Forest to copy Continen¬ 
tal Code. Forest served with the Signal Corps from 1912 to 1915 
and was assigned subsequently to the Army Transport Service (ATS) 
on the Mexican border with General Pershing. Later he became the 
chief operator of the ATS in San Francisco. He went on to serve in 
the Signal Corps in World War I, copying German codes in France, 
and received a certificate for meritorious service. After the war Red- 
fern served five years with a private radio company and then joined 
the Radio Division. 

In 1929 Redfern was detailed to work with the Treasury Depart¬ 
ment to aid its special agents in locating illicit radio stations. In these 
cases Treasury would develop a conspiracy case prior to the capture 
of one of the radios. Redfern would enter the illicit station at the 
invitation of either the special agents or a federal marshal and note 
the violation after inspection of the equipment. This rather cumber¬ 
some procedure permitted the enforcement of a law that provided for 
a five-year penalty. 7 


11 


In October 1929 Redfern received the following cable of appre¬ 
ciation from the Treasury Department: 

Treasury Department desires to express its appreciation for 
the excellent cooperation afforded this department and for 
the splendid service which you have performed on behalf of 
this government. 8 

Redfern continued to work in cooperation with the Treasury 
Department until 1935, when, as an inspector with the newly estab¬ 
lished Federal Communications Commission (FCC), he was trans¬ 
ferred to Buffalo, New York. In an attempt to retain Redfern’s ser¬ 
vices, commander Yeandle wrote to the chief engineer of the FCC, 
Dr. C. B. Jollife, that Redfern had the degree of familiarity with the 
wave lengths, callsigns, procedures, and the "fists” (transmission style) 
of illegal operators, that only long experience could produce. Yeandle 
thought that it would be of great assistance to the Coast Guard if 
Redfern were continued in his detail to radio inspection duty. He 
believed that Redfern’s services to the government would be more 
valuable if they took advantage of his long experience in handling 
smugglers’ traffic. 9 

Jollife replied that such an action, i.e., retaining him in his cur¬ 
rent job, would be detrimental to Redfern’s career and would result 
in financial loss to him, since the transfer to Buffalo carried with 
it a raise in pay. In addition, the FCC appropriation was not large 
enough to permit retaining Redfern on such duty. He suggested that 
if the Coast Guard felt that strongly about the matter then Redfern 
should be transferred from FCC to Treasury so that he could be paid 
from the proper appropriation and be assigned to the proper career 
structure. There is no evidence of a Coast Guard follow-up. 10 

Prior to 1930, cooperation among these agencies in radio intelli¬ 
gence was strictly ad hoc. On 18 August 1930, a meeting was held at 
the National Press Building in Washington, DC, to formulate a defi¬ 
nite plan regarding the enforcement of the Prohibition laws and use 
of radio intelligence. The meeting was attended by fifteen represen¬ 
tatives of the Coast Guard, the Bureau of Prohibition, the Bureau of 
Customs, and the Radio Division of the Department of Commerce. 


12 


Present at the meeting were 
the following: 

• for the Coast Guard— 

Lieutenant Commander 
E. M. Webster, Lieutenant 
Frank M. Meals, Lieuten¬ 
ant (Junior Grade) John L. 

Steinmetz, Radio Electrician 
C. T. Solt, and Chief Radio¬ 
man Wendell W. Patten, Jr.; 

• for the Bureau of Prohibi¬ 
tion—J. L. Acuff, Carlos 
M. Bernstein, and El. J. 

Simmons; 

• for the Bureau of Cus¬ 
toms—E. J. Shamhart and 
G. W. O’Kiefe; 

• and for the Radio Divi¬ 
sion of the Department of 
Commerce—W. D. Ter¬ 
rell, L. C. Herndon, William R. Foley, Forest F. Redfern, and 
Emery H. Lee. The meeting was chaired by Mr. Terrell. 

Lieutenant Commander Webster, chief of the Communica¬ 
tions System at Coast Guard Headquarters, defined the situation. 
The intercept stations of the Radio Division, the Bureau of Prohibi¬ 
tion, and the Coast Guard had identified over seventy illicit stations, 
ship and shore, operating in the vicinity of New York City since the 
beginning of 1930. Initially, most of the liquor-smuggling operation 
had been in the hands of independent operators. As the advantag¬ 
es of organization became apparent, the direction of the marketing 
operation in the U.S. came under the control of a few large gangs. 
At the same time, the various independent sources of liquor abroad 
began to come under the control of a few corporations, primarily 
Consolidated Exporters Corporation of Vancouver, British Colum- 



Captain (then Lieutenant) 
Frank Meals helped plan 
Rohibition enforcement 
using radio. (Photo USCG) 


13 







bia. The same companies also tended to take over the shipping of 
the liquor, but there always remained a place for the independent 
ship owner within the operation. The illicit radio stations were used 
to transmit internal communications of the rum-running organiza¬ 
tions. These communications were concerned with the direction of 
ships, the arrangement of contact points, the ordering of supplies, 
and the general conduct of the rum-running business. At the time 
of the meeting there were approximately 103 illicit stations between 
Maine and Florida, forty-five of them shore stations. Four of the 
shore stations were in Newark, one of them directing the activities of 
nine ships which accounted for illegal imports valued at six to seven 
million dollars a month. 

The illicit stations were equipped with the best and newest radio 
apparatus, capable of working with stations in foreign countries, and 
manned with first-class, experienced operators. English and French 
traffic, both plaintext and encrypted, was transmitted; and radio pro¬ 
cedure was primarily amateur and commercial, although, according 
to Webster, the occasional use of naval procedure indicated that some 
of the illicit operators were ex-Navy or ex-Coast Guard. 

During the preceding twelve months, five illicit stations in the 
vicinity of New York City had been raided as a result of information 
obtained through intercept by the Coast Guard, the Bureau of Prohi¬ 
bition, and the Department of Commerce. Intercept was not difficult, 
since it required only an adequate receiver and a competent operator. 
Location of the stations, however, was another matter. Direction finding 
(DF) was still in its infancy, and DF bearings taken on high-frequen¬ 
cy radio stations were only approximate and varied greatly in differ¬ 
ent localities. Lieutenant Meals pointed out that when the seventy- 
five-foot patrol boat CG-210, under his command, was fitted out as an 
intercept platform with high-frequency receivers, a radio compass had 
been installed for direction finding. Meals’s comment concerning this 
apparatus defines the technical difficulties involved: 

This is something new and just how it will work I do not 

know, but our experience before with the radio compass has 

been ... that the directional factor is limited as to distance 


14 



Direction finder model in use through 1930. Then a smaller, 
more modern apparatus was built that could be mounted in 
an automobile. (Photo from Rum War: The U.S. Coast Guard 
and Prohibition by Donald L. Canney) 

and it is also approximate. In this connection we are up 
against high frequencies which are very erratic. The appara¬ 
tus is not entirely suitable, especially compass apparatus, so 
that you encounter technical difficulties in locating stations, 
but I think the success we have had in locating the High¬ 
land’s case and some of the others is very remarkable when 
you consider the apparatus. 11 


15 








t 



The CG-100 in 1928, one of the 203 75-foot patrol boats 
built for Coast Guard Prohibition enforcement duties. 
Known as “six-bitters,” they entered service between 1924 
and 1925. With a top speed of 15 knots, they were slower 
than most rumrunners but well built for off-shore opera¬ 
tions. (Photo by Joseph N. Pearce, U.S. Coast Guard) 


The conclusions of the meeting were that the major problems 
involved were lack of proper equipment, money, and a clear delineation 
of areas of responsibility. Only time could solve the first two. As to the 
third, it was decided that the Coast Guard had responsibility for tar¬ 
gets at sea, the Bureau of Customs for the targets at points of entry, and 
the Bureau of Prohibition for targets located farther inland, with the 
Department of Commerce Radio Division making its expertise avail¬ 
able as required and continuing in the exercise of its primary respon¬ 
sibility, the location of illicit transmitters. A committee, operating in 
New York City, was constituted to determine exactly what equipment 
and personnel were necessary to solve the overall problems; to specify 
what each organization could contribute in terms of equipment and 
personnel to provide each of them with the kind of information and 
assistance it required.This committee was to be made up of Lieutenant 
Meals and Messrs. Simmons, O’Kiefe, and Lee. 12 


16 





The Arrival of Mrs. Friedman 

C ryptanalysis of rumrunner traffic prior to Weiskopf’s 
appearance on the scene in 1926 appears to have been done 
by such personnel in the cognizant agencies as were inter¬ 
ested and had a knack for the work. As a consequence, results tended 
to be a bit “hit or miss.” By the spring of 1927, an enormous number 
of encrypted messages had accumulated in the Coast Guard Intel¬ 
ligence Division. Root, by then a captain, took the matter up with the 
Bureau of Prohibition and established a joint effort, with the Bureau 
providing the personnel and Coast Guard the equipment. Intercept 
stations were set up in San Francisco and Florida, and in April 1927 
Mrs. Elizebeth S. Friedman 13 was employed by the Bureau of Pro¬ 
hibition as a cryptanalyst and established in the Coast Guard Intel¬ 
ligence Division to decrypt the material received and begin work 
on the hundreds of messages on file. Within two months she had 
eliminated the backlog. Since the sources of encrypted traffic were 
increasing, the Treasury Department launched an intelligence service 
based on the reading of illegal encrypted correspondence. 

In May and June of 1927, the Coast Guard base at San Pedro, 
California, forwarded to headquarters a series of messages which 
resulted in the breaking of systems used by the two rival rum fleets 
operating on the West Coast. At that time all traffic was forwarded 
to Washington where it was broken and rendered into plain text. 
If it appeared that the decrypt could be useful immediately, it was 
encrypted and telegraphed back to the West Coast; otherwise, it 
was forwarded by airmail. This method of operation continued until 
mid-1928. At the request of the law enforcement agencies on the 
West Coast, Mrs. Friedman went to San Pedro and San Francisco 
in June and July of that year to instruct personnel there in decrypt¬ 
ing traffic passed in systems that had already been broken, making 
the information contained therein immediately available. Clarence 
A. Housel, of the Office of the Coordinator of Pacific Coast Details 
in San Francisco, was the first person selected to receive this training. 
Subsequently, as new systems were solved in Washington, complete 
details were forwarded to Housel, who thenceforth decrypted the 
messages immediately upon receipt. 14 


17 


During 1927 and 1928, only two general systems changing 
approximately every six months were in use on the West Coast. 
Between May 1928 and January 1930, some 3,300 messages were 
passed between the Pacific Coast rumrunner fleets and their princi¬ 
pals in Vancouver, British Columbia. Nearly fifty separate and dis¬ 
tinct cryptosystems were employed by four or five shore stations and 
approximately twenty-five vessels. Many of the systems employed 
multiple encryption. By 1930, according to Mrs. Friedman, there 
was a different system for practically every vessel, some of them of 
a complexity never attempted by any government for its most secret 
communications. 15 

The use of only two general systems on the West Coast in 1927- 
1928 reflected the fact that the rumrunners there were organized 
into two major fleets—Consolidated Exporters Corporation and the 
Hobbs’ interests, both of Vancouver. While the crypto net became 
more complex between 1928 and 1930, Consolidated Exporters took 
over most of the fleet during the same period and expanded opera¬ 
tions into other waters. By 1930 the company had agents in Mexico, 
British Honduras, Cuba, Louisiana, Florida, the Bahamas, and Que¬ 
bec, with a major operation working out of Belize, British Honduras. 
All agents and operations were in direct communication with Van¬ 
couver, passing several hundred encrypted messages per month. 

In October 1929 Mrs. Friedman went to Houston, Texas, where, 
over a month, she broke twenty-four different cryptosystems, solving 
650 messages for U.S. Customs there. 

Traffic totals for the southeastern Atlantic coast were, at this 
time, running about twenty-five messages per day, mostly between 
Florida and Georgia, on the mainland, and from Cuba and the Baha¬ 
mas. 16 The other major source of rumrunner traffic on the East Coast 
was the New York City area. Decrypted traffic from this area revealed 
smuggling operations extending from the Gulf of Mexico to Nova 
Scotia. 

From 1928 to 1930 the Cryptanalytic Unit decrypted approxi¬ 
mately 12,000 messages for the Bureau of Customs, the Coast 
Guard, the Bureau of Narcotics, the Bureau of Internal Revenue, 


18 



The Treasury Department’s leading cryptanalyst, 
Elizebeth S. Friedman, leaves her Washington, DC, home 
to appear in federal court, 1934. (Photograph courtesy of 
the George C. Marshall Foundation, Lexington, Virginia) 


19 









the Bureau of Prohibition, and the 
Department of Justice. To produce 
this quantity, about 25,000 mes¬ 
sages were examined annually. The 
information derived from these 
texts concerned illegal activities on 
the Pacific Coast from Vancouver 
to Ensenada; on the Gulf Coast 
from Belize to Tampa; and on the 
Atlantic Coast from Key West to 
Savannah (including Havana and 
the Bahamas) and from New Jersey 
to Maine (including Bermuda, St. 
Pierre, and Newfoundland). Dur¬ 
ing this period, the Cryptanalytic 
Unit consisted of Mrs. Friedman 
and one clerk. 17 

It is not known when Mrs. 
Friedman transferred from the 
Prohibition Bureau to the Coast 
Guard, but in September 1930 
an attempt was made to transfer 
both her and her assistant from the 
Coast Guard Intelligence Office to 
the Division of Special Agents, Bureau of Customs. On 3 October 
the commandant of the Coast Guard ordered transfer held in abey¬ 
ance until they could determine the feasibility of establishing a radio 
intelligence service in the field supported by a cryptanalytic section at 
Coast Guard Headquarters. This would put the enforcement agen¬ 
cies (Coast Guard, Customs, and Justice) in immediate possession of 
specific knowledge of the operations of the smugglers. As a conse¬ 
quence, they would be able to launch seizure actions or initiate pre¬ 
ventive measures while the smuggling operations were still in the 
planning stage. Customs assented to Coast Guard retention of Mrs. 
Friedman and also agreed that the Coast Guard was the logical gov¬ 
ernment agency to handle the radio problem. 18 


... According to 
Mrs. Friedman, 
[some of the 
cryptosystems 
were] of a com¬ 
plexity never 
attempted 
by any govern¬ 
ment for its 
most secret 
communications. 


20 



A Radio Intelligence Effort 
Becomes Necessary 

I n a recommendation to the commandant of the Coast Guard, 
Lieutenant Commander Frank J. Gorman, head of the Coast 
Guard intelligence unit, stated that practically all operations 
of the smuggler were directed by radio in code and cipher. Gorman 
felt that once the government mastered rumrunner radio activities, 
the smugglers would be so handicapped that smuggling from the 
high seas would be cut in half. On the East Coast the movement 
and operation of the smuggling vessels, usually referred to as “blacks” 
because of their habit of running without lights, were directed by 
forty-five shore stations between Maine and Florida. At this time fif¬ 
ty-eight “blacks” in East Coast waters were known to be using radio. 
The Coast Guard had a record of eighty-one stations in a single 
group whose operations were directed from the New York area. On 
the West Coast all smuggling was directed by two radio stations, one 
in Vancouver and one on the California coast. Traffic intercepted on 
these nets contained much of the information that the investigative 
agencies of Customs and Justice were after and practically all of the 
plans—including contact points—that the Coast Guard needed. 

Gorman admitted that, up to now, the material obtained from 
intercept had been primarily informative, but he pointed out that a 
recent experiment had shown that practical application to enforce¬ 
ment was possible. Elizebeth Friedman’s husband, Major William F. 
Friedman, chief of the War Department’s Signal Intelligence Divi¬ 
sion and an expert cryptanalyst, had been detailed to the CG-210 for 
a two-week cruise in the New York area. During these two weeks, 
the code used by one group of smugglers was broken, and the operat¬ 
ing orders to the rum ships were read as received. The code was also 
compiled and made available for use by other Coast Guard units. 
Moreover, two radio stations, one in New Bedford, Massachusetts, 
and the other in Coney Island, New York, were located, raided, and 
put out of business by Department of Justice agents and Department 
of Commerce inspectors working in conjunction with the Coast 
Guard. Lastly, ample evidence was obtained linking one radio station 


21 


with the recently seized Nova 
V to obtain an indictment on 
conspiracy charges. Gorman 
said that this two-week voy¬ 
age with a nine-man crew had 
accomplished more than the 
destroyer force and all other 
units combined had been able 
to effect in months. 

From 1929 to 1930, there 
had been a 34 percent increase 
in the number of foreign 
“blacks,” from 103 to 138. As 
their number increased, the 
complexity of their radio com¬ 
munications kept pace. In 1930 one of the syndicates, probably Con¬ 
solidated Exporters, was paying the man in charge of its radio opera¬ 
tions $10,000 per year. According to Gorman, the Coast Guard on 
the West Coast was practically impotent, and on the East Coast it 
could do little more than annoy the rumrunners. He strongly recom¬ 
mended that a radio intelligence unit be established in order to better 
employ the Coast Guard’s resources. The necessary field intercept 
units could be provided from current resources, but funds would have 
to be provided to establish a central organization in Washington. 19 

The cornerstone of the whole effort, of course, would be crypt¬ 
analysis. And it was imperative, Gorman said, that such a section 
be established in the Intelligence Division. The alternative was that 
Mrs. Friedman would go to Customs and work on the intercept from 
two Customs stations, and 

the Coast Guard with its destroyers and patrols on a military 
basis will continue to patrol the seas and operate precisely as 
if radio had never been heard of, spending hundreds of thou¬ 
sands of dollars in an effort to stumble across the informa¬ 
tion that is constantly on the air, i.e., the location and contact 
points of the rumrunners. 20 


In 1930, one of 
the [smuggling] 
syndicates ...was 
paying the man 
in charge of its 
radio operations 
$10,000 per year. 


22 



The Cryptanalytic Unit 

I n addition to the dollars and cents side of the problem, there was 
a question of morale. A sense of futility was spreading through 
the Coast Guard, together with a feeling that a demonstration 
of effort, rather than the effort itself, was all that was required. The 
results that could be expected from a radio intelligence effort would 
more than compensate for the expenditure. 

The central organization foreseen by both Gorman and Mrs. 
Friedman was as follows: 


Position 

Grade 

Salary 

Total 

Cryptanalyst in charge 

P-4 

$4,000 

$4,000 

Assistant cryptanalyst 

P-1 

$2,000 

$2,000 

One senior cryptographic clerk 

CAF-5 

$2,000 

$2,000 

One cryptographic clerk 

CAF-4 

$1,800 

$1,800 

Three assistant cryptographic clerks 

CAF-3 

$1,620 

$4,860 

$14,660 


Gorman recommended that the funds for this organization be 
authorized in the FY31 appropriation. He deemed the matter to be 
of sufficient importance to justify asking for a “deficiency appropria¬ 
tion,” but doubted that that could be obtained because of the current 
fiscal situation. He also recommended that three more patrol boats 
be equipped as the CG-210 and manned with a crew of ten men 
each, including four radiomen; and that fifteen men, including six 
radiomen and six warrant officers, be assigned to the New York Intel¬ 
ligence Unit under the command of Lieutenant Meals, formerly cap¬ 
tain of the CG-210. The warrant officers would receive preliminary 
training under Meals and would then be brought to Washington 
for cryptanalytic training after the cryptanalytic section was estab¬ 
lished. Gorman realized that these individuals were not available but 
considered the requirement to be so overriding that they could and 
should be provided from current strength, depleting other units if 
necessary. 21 


23 





The /’m A/one 


I n justifying the creation of the cryptanalytic unit, Mrs. Fried¬ 
man cited, as one of the most conspicuous examples of the value 
of cryptanalysis in the enforcement of the Prohibition laws, the 
case of I’m Alone , a “black” sunk by the Coast Guard in the Gulf of 
Mexico in March 1929. 


I’m Alone was a two-masted schooner built in 1923 in Lunen- 
berg, Nova Scotia, for the liquor trade. Initially it operated out of St. 
Pierre et Miquelon along the coast of New England and New York, 
earning $3 million for its owners. In 1928 it was sold and placed 
under the command of a bemedalled ex-officer of the Royal Navy, 
JohnT. Randall. The ship sailed for the Gulf of Mexico with 1,500 
cases of liquor from St. Pierre, headed for a rendezvous off the Loui¬ 
siana coast scheduled for early March 1929. Upon the arrival of the 
I’m Alone, the USCG cutter Wolcott appeared and trailed the schoo¬ 
ner for two days. Randall left the area in disgust but returned a few 
days later, met a contact boat, and started unloading the liquor. On 20 
March 1929, the Wolcott returned and determined that the I’m Alone 
was within the territorial waters of the U.S. and ordered it to heave 
to and be searched. It refused to obey and the cutter gave chase. Two 
hundred twenty miles out in the Gulf of Mexico, in a rising gale, 
the cutter Dexter joined the chase and boxed in the I’m Alone, finally 
sinking the rumrunner on the high seas and killing one crew mem¬ 
ber. The rest of the crew were rescued. 


The sinking had taken place miles beyond the limit of maritime 
law jurisdiction. Since the ship was flying the Canadian flag when it 
was sunk, the Canadian government filed a claim against the United 
States for $365,000 for the loss of ship and cargo. 

The Canadian claim was based on the presumption of Cana¬ 
dian ownership of ship and cargo. In order to void the claim, the 
United States government was required to prove its contention that 
the I'm Alone was American-owned. Such proof would reduce the 
incident from the sinking of a ship owned by a friendly power to 
a flag insult, which could be settled by formal apology and a small 
cash indemnity. 


24 



The crew of the I’m Alone after its sinking. 

Left to right: Edward Bouchard, sailor (in back); Captain 
John Thomas Randall, ex-officer of the Royal Navy; Jens 
Jensen, assistant engineer; John George Williams, mate; 
Chester Hobbs, engineer; James Barrett, sailor; William 
Wordsworth, cook; Eddie Young, sailor; and Mr. Simpson, 
British vice consul in New Orleans (photo source unknown) 


The Coast Guard had first started collecting the communica¬ 
tions of the I’m Alone in December 1925 and had targeted the ship 
continuously during the next three years. Information derived from 
this traffic had made Coast Guard analysts certain that the ship was 
American-owned. In addition, traffic was subpoenaed from com¬ 
mercial cable companies. When the code system used in the latter 
was broken, the information therein, combined with intelligence 
from other sources, resulted in the identification and arrest of the 
ship’s owners, Dan Hogan and Marvin Clark of New York City. As 
a result, the final settlement between Canada and the U.S. amounted 
to $50,000 for the insult to the Canadian flag and for the destruction 
of Canadian seamen’s property. 22 


25 








Mrs. Friedman was later instrumental in the breaking up of Con¬ 
solidated Exporters. By 1933 Consolidated Exporters Company was 
the largest and most powerful smuggling syndicate in existence, con¬ 
trolling a near monopoly of smuggling in the Gulf of Mexico and on 
the West Coast. 23 In 1931 special agents of the Bureau of Prohibition 
raided the syndicate’s New Orleans headquarters and began an inves¬ 
tigation of Consolidated Exporters’ smuggling activities that lasted 
nearly two years and cost several hundred thousand dollars. More than 
100 persons were indicted, including the New Orleans ring leaders who 
directed smuggling activities throughout the Gulf. The case against 
the syndicate ring leaders was based on a charge of conspiracy, and it 
was absolutely essential to connect these persons with the actual opera¬ 
tion of the smuggling vessels. Convictions for conspiracy required the 
construction of a case connecting the ship, the illicit shore station and 
its operator, and the “bosses” controlling the operation. The only way 
to accomplish this was through the encrypted messages originating in 
the New Orleans office of Consolidated Exporters and transmitted by 
their illicit radio station which would show that the defendants actu¬ 
ally directed the movements of the smuggling vessels. 

Hundreds of encrypted messages between the “black” ships and their 
shore stations had been intercepted by the Coast Guard Intelligence 
Office in Mobile, Alabama, and many more were seized by the special 
agents when they raided the syndicate headquarters in New Orleans. All 
of those messages were forwarded to Coast Guard headquarters, where 
they were deciphered, decoded, and indexed by the Cryptanalysis Section. 
When the United States attorney went before the grand jury for an indict¬ 
ment, Mrs. Friedman was sent from Washington as a witness, and when 
the case came to trial in early 1933, she again went to New Orleans, where 
she was the star witness for the prosecution. After the trial, Colonel Amos 
W. W. Woodcock, former director of the Bureau of Prohibition, who had 
been sent to New Orleans as special assistant to the U.S. attorney general 
to prosecute the case in person, commended Mrs. Friedman, stating: 

[She] was summoned as an expert witness to testify as to the 
meaning of certain intercepted radio code messages. With¬ 
out their translations, I do not believe that this very impor¬ 
tant case could have been won. 24 


26 



27 


The I’m Alone —a “black,” or contact boat that ran without lights—being searched by Coast Guard vessel 
CG-173. The I’m Alone was the center of a major 1929 Prohibition enforcement case that hinged on 
Elizebeth Friedman’s cryptanalysis in the Coast Guard Intelligence Division. (Photo source unknown) 








Security Problems 

T he cooperative system set up at the 18 August 1930 meet¬ 
ing contributed greatly to the success of these agencies in 
enforcing the Prohibition laws. As time went on, however, 
it was learned that collaboration with other agencies contributed to 
the rise of a problem which has plagued signals intelligence down 
to the present: the problem of avoiding the compromise of sources 
and methods used. Coast Guard policy was to freely forward para¬ 
phrased information derived from intercept and cryptanalysis. The 
same policy required that no information be divulged on rumrun¬ 
ner cryptosystems or on the degree of analytic success achieved, even 
to other Coast Guard units. The Intelligence Division had found 
that while the rumrunners realized that they were being intercepted 
and that the Coast Guard was trying to read their traffic, they usu¬ 
ally relied on the infallibility of their cryptosystems until advised by 
an informant that the system had been broken. When information 
concerning cryptanalytic success was distributed among government 
agencies, it invariably became known to the rumrunners. 

In one case, an encryption system used between Belize and New 
Orleans was broken with considerable difficulty and with the aid of 
the Signal Intelligence Service. Because of the nature of the system, 
long messages in it were far more difficult to break than short mes¬ 
sages. Shortly after the system was broken and transmitted to the 
Intelligence Office at Mobile, a message from New Orleans to Belize 
was intercepted and decrypted. The message stated that the syndi¬ 
cate had definite information that the Coast Guard could break the 
system when short messages were used and directed that no mes¬ 
sages of fewer than twelve words be sent. Subsequent investigation 
indicated that the source of the leak appeared to be a hanger-on at 
the Customs House in New Orleans. The Bureau of Customs was so 
informed, but the damage had been done. 25 


28 



ALake-class cutter, likely the Mendota, with rumrunner Edna, 
later commissioned into USCG as the CG-936. (From Rum War: 
The U.S. Coast Guard and Prohibition by Donald L. Canney) 


After Repeal 

A /ith the election of Franklin D. Roosevelt, a bill for the repeal 
of the Eighteenth Amendment was proposed by Congress 
V y on 20 February 1933 and ratified by the states on 5 Decem¬ 
ber of the same year. Contrary to popular belief and hope, repeal did not 
terminate efforts to smuggle alcoholic liquors; rather, it gave new hope 
and grandiose ideas to the smugglers as a means of making easy money 
on a large scale by smuggling liquor to evade the excise taxes. 


This post-repeal smuggling cost the Treasury Department more 
than $35,000,000 annually in lost revenue. Federal statutes were not ade¬ 
quate to cope effectively with this new smuggling problem, particularly 
in view of the reduction in size of the Coast Guard and other enforce¬ 
ment agencies as a result of the Economy Act. Secretary of the Treasury 
Henry Morgenthau immediately took measures to provide additional 
funds to the Coast Guard and to coordinate the activities of all Treasury 
law enforcement agencies. He further acted to increase cooperation with 
the Canadian government, which was also experiencing problems with 
liquor smuggling, now that it was being done to evade liquor taxes. 26 


29 









Interagency and 
International Cooperation 


C y 1935, cooperation among Treasury law enforcement agen¬ 
cies was complete. A statement of responsibilities for the 
Coast Guard, the Alcohol Tax Unit, and the Bureau of Cus¬ 
toms was formalized in the case of the rumrunner Reidun. The Coast 
Guard was responsible for “preventive work” and would endeavor to 
keep under surveillance the vessels taking cargo from the Reidun. 
The Alcohol Tax Unit would furnish any equipment and personnel 
needed for patrol work to the responsible authorities in New York 
and Boston and, jointly with the Bureau of Customs, would assume 
responsibility for investigation of the various organizations believed 
to be interested in the Reiduris cargo. All three services were directed 
to provide full support to this effort. 27 


In the case of the Bodo, a “black” out of Antwerp, Belgium, a 
representative of the U.S. Coast Guard was ordered to proceed to 
Halifax, Nova Scotia, with intelligence personnel to work with the 
Royal Canadian Mounted Police (RCMP), Halifax. RCMP, Ottawa, 
was asked to assist in locating and observing Bodo. In addition, the 
Department of State arranged for Coast Guard cutters to call at Hal¬ 
ifax and atTrepassey Bay and St.John’s, Newfoundland, as necessary, 
between 10 and 31 December 1935. 28 


During the Prohibition period, there appears to have been little 
cooperation between U.S. and Canadian authorities in regard to 
limiting the liquor trade. The smuggling of liquor into the United 
States was not a crime in Canada, and a number of quite respectable 
Canadian companies and persons were engaged, one way or anoth¬ 
er, in the trade. After repeal, the profits of liquor smuggling came 
from the evasion of excise taxes, which were as vexing in Canada as 
they were in the United States, and the smuggling organizations, 
now working out of Europe, began to run alcohol into Canada. The 
RCMP began intercepting “black” radio transmissions and estab¬ 
lished an informal exchange of the fruits of this intercept with the 
U.S. Coast Guard. 29 


30 


Initially, the cooperation was somewhat less than perfect. Cana¬ 
dian rumrunners returning to Canadian ports were required to file 
“Inward Reports” concerning their voyages. These were frequently 
untruthful. On 26 September 1935, the Miserinko filed the following: 

I, George Lohnes, Master of the M/V Miserinko, do sol¬ 
emnly swear that I cleared from Yarmouth, N.S., on August 
29th for St. Georges, Bermuda; proceeded to position one 
mile west of Lurcher Lightship, loaded 1,200 cases of alco¬ 
hol from MN Popocatapelt [ sic \; then proceeded to position 
N. Lat. 37-15, W. Long. 73-20; transferred entire cargo to 
boat name unknown: then proceeded direct to Lunenburg 
in ballast, not having landed any spirituous liquors within 
territorial waters of Canada. 

In fact, the Miserinko had hovered off the New Jersey coast for 
nearly a month before succeeding in unloading her entire cargo, which 
was disposed of in two or three contacts in several different positions. 
Miserinko was under intermittent surveillance by the Coast Guard 
during the entire period. The phrase “boat name unknown” occurs fre¬ 
quently in these reports. Commander Yeandle stated at one time: 

Here are instances of vessels with cargoes running into hun¬ 
dreds of dollars with the transfer effected with the vessels 
alongside of each other and frequently during hours of day¬ 
light, and still the names of the vessels involved are unknown 
to the Masters. It is inconceivable and must likewise be to 
Canadian officials. 30 

On 29 January 1936, Commander Thompson of the United 
States Coast Guard and Mr. Avis of the Alcohol Tax Unit went to 
Ottawa to discuss, among other things, the problem of the Inwards 
Reports. The main problem was, apparently, that these declarations 
were made to the collector of customs of the individual ports. In 
many of the smaller ports, these men were related to, or associated 
with, the shipmasters. These collectors of customs did not require 
explicit details and did not scrutinize the reports closely, and for vari¬ 
ous reasons the RCMP was not in a position to query the collectors. 31 


31 


In December 1935 the Coast Guard had loaned a Model 14-B 
direction finder to the RCMP, which proved to be of great value 
to both services. By mid-1936 the center of smuggling activity had 
shifted from the New Jersey coast and St. Pierre et Miquelon to 
Lurcher Shoal and Seal Island, Nova Scotia, and to Petit Manan and 
Grand Manan islands. As a result, the RCMP had shifted the 14-B 
to Chebucto Head, and Yeandle proposed the loan of a Model 14-D 
for use in the vicinity of Yarmouth, N.S. 

Pursuing this policy to its logical conclusion, Yeandle also pro¬ 
posed establishing a direct radio link between New York District 
Headquarters and the RCMP Headquarters in Halifax for exchang¬ 
ing bearings and other pertinent information. 32 

General MacBrien, RCMP, had discussed with Commander 
Parker, chief intelligence officer of the Coast Guard, the possibility 
of providing a Coast Guard cryptanalyst to train RCMP personnel. 
Radio Electrician O. M. Helgren, USCG, was a trained cryptographer 
who had been to Halifax twice previously in connection with both the 
Reidun and Bodo cases. Yeandle agreed to sending Helgren to Halifax 
not only to provide cryptanalytic instruction but also to install and 
maintain the 14-D direction finder and the two-way radio. 33 

The rumrunners were not necessarily passive in this radio war. 
In fact, an attempt was made in July 1936 to infiltrate the RCMP 
intelligence effort. One individual approached the RCMP Marine 
Division in Halifax and asked if they had a DF station, as he would 
like to get a job operating one. When he received a negative answer, 
he asked if the U.S. Coast Guard used direction finders and if the 
RCMP copied rumrunner codes. Captain J. W. Bonner, the RCMP 
officer conducting the interview, told the man that the RCMP used 
aircraft for locating “blacks.” The aircraft then notified a cutter, 
which proceeded to the vicinity of the rumrunner and started trail¬ 
ing it. Bonner said later that he had used this story to try to convince 
the man that neither DF nor cryptanalysis was used by the RCMP. 
In another case, a “rummy” kept trying to get RCMP officials to tell 
him which of his men was a police informant, since he was convinced 
that his codes were being read. 34 


32 


Cooperation between the two 
countries was tightened and commu¬ 
nications improved at a conference 
held in Halifax on 27 July 1938, at 
which it was agreed to bring the U.S. 
consul general in Halifax and the vice 
consul in St. Pierre et Miquelon more 
fully into the picture. 35 

Later in the year, the RCMP 
suggested sending two of its person¬ 
nel to New York for training in cryp¬ 
tography. The two men proposed had 
some experience in the field, but the 
commanding officer of the RCMP 
Marine Division felt that this training 
would improve their proficiency. The 
request originated with him and was 
addressed to the intelligence officer 
of the New York Division of the Coast Guard, Commander Yeandle. 
Lieutenant Frank E. Pollio, who had become the acting intelligence 
officer of the Coast Guard upon the departure of Commander Park¬ 
er, examined the provisions of the 1925 treaty between the U.S. and 
Canada concerning the suppression of smuggling and reached the 
conclusion that extension of cooperation into this field required the 
permission of higher authority. The sending of Helgren to Halifax in 
1935 had been kept on a very unofficial basis with the idea that, after 
he gave the RCMP a start in the field, they would continue on their 
own. Pollio suggested that a formal request be made by the RCMP 
to the commandant of the Coast Guard, who could then present the 
matter to the State Department. Yeandle had pointed out that many 
of the RCMP radio operators were civilians from the Department 
of Transport, many of whom had not been investigated and some of 
whom were former rumrunner radio operators. It would therefore be 
necessary, if the training were provided, that the Canadian trainees 
be regular members of the RCMP. There are no records available 
indicating that the training ever did, in fact, take place. 36 


A u » 

rummy 
kept trying to 
get RCMP 
officials to tell 
him which 
of his men 
was a police 
informant... 


33 



New Duties for the 
Intelligence Division 


C y November 1938 offshore liquor smuggling had ceased 
almost entirely. In 1936 the Coast Guard had begun to 
cooperate with the Bureaus of Customs and Narcotics to 
suppress the smuggling of illegal drugs into the United States. Also 
after 1936, the Cryptanalytic Unit was tasked by the secretary of 
the treasury with developing cryptographic communications for his 
office and for the law-enforcement bureaus. As a consequence, the 
duties of the Intelligence Division were not reduced with the abate¬ 
ment of liquor smuggling. 37 


After the establishment of the Money Stabilization Board under 
the Treasury Department, the Cryptanalytic Unit provided this 
board with information on foreign exchange control; after 1938 it 
maintained a close watch for any clues in radio traffic pointing to 
sudden changes in the international situation. In August 1939 the 
unit was transferred to the Communications Division of the Coast 
Guard, where it operated in response to requests from the Intelli¬ 
gence Division. 


Organized smuggling had practically disappeared by 1939, and 
for several months before the German invasion of Poland, the Coast 
Guard had been assigned to monitor the shipborne communications 
of potential belligerents, watching for, among other things, indica¬ 
tions of possible entry into the war by other nations. This was done 
to forewarn Treasury, which could then take appropriate actions con¬ 
cerning the freezing of funds. 38 


34 




The crew of the rum boat Linwood set fire to the vessel to 
destroy evidence of their illicit trade. (From Rum War: The 
U.S. Coast Guard and Prohibition by Donald L. Canney) 


The Approach of War 

ith the outbreak of war in Europe, the Treasury Depart¬ 
ment’s statutory responsibility for enforcement of U.S. 
neutrality brought on a number of new responsibilities 
for the Coast Guard. Among these were the sealing of communi¬ 
cations equipment on all belligerent vessels entering U.S. ports and 
the prevention of communications concerning shipping of the move¬ 
ment of belligerent ships, communications which would compromise 
the neutrality of the United States. 

In monitoring these communications, USCG stations reported 
repeatedly that they were intercepting traffic similar to that of the old 
rumrunner transmitters. Solution of this traffic showed that it was 
the communications of Axis agents. Intercept and analysis of these 
communications were to constitute a major part of the Coast Guard 
contribution to the intelligence effort in World War II. 39 



35 









Notes 


1. Federal Communications Commission, “The Radio Intelligence 
Division of the Federal Communications Commission,” August 
1943, 12-13. (This rather self-serving report was issued by the 
FCC in answer to the charges made by the U.S. House of Rep¬ 
resentatives Committee to Investigate the Federal Communica¬ 
tions Commission, better known as the Cox Committee.) Infor¬ 
mation on the 1924 appropriation is from T. Michael O’Brien, 
Guardians of the Eighth Sea: A History of the U. S. Coast Guard on 
the Great Lakes, Ninth Coast Guard District Command, Govern¬ 
ment Printing Office 1976. 

2. Testimony of George E. Sterling, Chief of the FCC Radio Intel¬ 

ligence Division, before the House Committee to Investigate the 
Federal Communications Commission, August 1943, pp. 3-4 of 
his manuscript. 

3. Letter from Commander Yeandle to Commander Stanley V. Park¬ 

er, Chief Intelligence Officer, USCG, 7 November 1934. 

4. Malcolm F. Willoughby, The Rum War at Sea (Washington, DC: 
Government Printing Office, 1964), 109. 

5. The description of the establishment of “Radio New York” is based 

on the correspondence of Commander Charles S. Root, intelli¬ 
gence officer of the Coast Guard, with Robert Iversen, employee 
of the New York Times radio station, October 1925 to March 1926. 
This and other documents cited are in the National Archives 
Record Group 26, “Records of the U.S. Coast Guard Intelligence 
Division.” Box 53, “Correspondence Relating to New York in 
1925.” 

6. Memorandum from Lieutenant Commander F. J. Gorman to the 
Commandant, USCG, “Radio Intelligence; Establishment of 
Cryptanalytic Section at Headquarters and Intercept Stations in 
the Field,” 10 October 1930; and 26 August 1982 interview with 
Dr. Solomon Kullback, NS A Oral History Collection. 

7. Report from Forest F. Redfern to Arthur Batcheller, U.S. Supervi¬ 
sor of Radio, 2nd Radio District, New York, 26 April 1930. 


36 


8. Cable from Assistant Secretary of the Treasury Lowman to Forest 
F. Redfern, 17 October 1929. 

9. Letter from Commander Yeandle to Dr. C. B. Tollife, 3 December 

1934. 

10. Letter from Dr. Tollife to Commander Yeandle, 12 December 
1934. 

11. Coast Guard Lieutenant Frank M. Meals; “Report of a Meeting 
Held in Room 633, National Press Building, on August 18,1930, 
at 10:00 A.M., for the Purpose of Formulating a Definite Plan of 
Procedure Regarding the Enforcement of Prohibition Laws and 
the Use of Radio in Connection with the Rum-Running Activ¬ 
ity,” 1-4. 

12. Ibid., 4-12 and addenda. 

13. Elizebeth Smith Friedman, born in 1898, was the first woman 
in the United States to engage professionally in technical crypt¬ 
analysis. She received her start in this field in 1916 when she was 
hired by George Fabyan to work in his Riverbank Laboratories 
in Geneva, Illinois. Her job was to aid in the research attempt to 
read “Baconian” cipher and thus prove that Francis Bacon wrote 
Shakespeare’s plays and sonnets. At Riverbank she met and mar¬ 
ried, in 1917, William F. Friedman, head of the Department of 
Genetics at Riverbank Laboratories. She is sometimes credited 
with having first interested her husband, who later became the 
head of the War Department’s Signal Intelligence Service, in 
cryptanalysis. Mrs. Friedman was the Treasury Department’s 
leading cryptanalyst during Prohibition and the immediate pre- 
World War II period, and she became possibly the world’s most 
famous cryptanalyst during that period as a result of her court 
appearances as an expert witness for the prosecution. 

14. Elizebeth S. Friedman, “History of Work in Cryptanalysis, April 
1927 to June 1930,’’undated, 1-3. [Portions reprinted in the Cryp¬ 
tologic Quarterly , 1998, Vol. 17, No. 4,119-125.] 

15. Ibid., 3. 

16. Ibid., 4. 

17. Ibid., 4-5. 


37 


18. Memorandum from F. J. Gorman to Commandant, USCG, 10 
October 1930,1. 

19. Ibid., 1-4. 

20. Ibid., 5. 

21. Ibid., 5-6, and Elizebeth S. Friedman, “Memorandum upon a 
Proposed Central Organization at Coast Guard Headquarters for 
Performing Cryptanalytic Work,” 30 November 1930. 

22. Elizebeth S. Friedman’s “Memorandum upon a Proposed Central 
Organization,” 30 November 1930; Leah Stock Helmick, “Key 
Woman of the T-Men,” Reader’s Digest, September 1937; Wil¬ 
loughby, Rum War at Sea, 128-30; and Howard V. L. Bloomfield, 
The Compact History of the United States Coast Guard (New York: 
Hawthorne Books, 1966), 151-152. 

23. This according to a memorandum from Lieutenant Commander 
Gorman to the Commandant, USCG, “Work of the Cryptana¬ 
lytic Section of Headquarters for Other Branches of the Govern¬ 
ment,” 8 July 1933. 

24. Letter from Colonel A.W.W. Woodcock to the Secretary of the 
Treasury, 28 June 1933; Gorman’s 8 July 1933 memorandum to 
the Commandant; and Willoughby, Rum War at Sea, 112. 

25. Memorandum from Lieutenant Commander Gorman to Mr. 
T. J. Gorman, Deputy Commissioner of Customs, Washington, 
DC, 22 June 1933 (classified), and Kullback NSA Oral History 
interview, 1982. 

26. Memorandum for the Secretary of the Treasury from Rear Admi¬ 
ral R. R. Waesche, Commandant, USCG, 16 November 1938. 

27. “Preventive and Investigative Program Agreed upon in the Reid- 
un Case,” 12 November 1935 (classified); memorandum from 
the Commandant, USCG, “Special Investigation,” 14 Novem¬ 
ber 1935 (classified); and memorandum from the Commandant, 
USCG, to the Commander, New York Division, ‘Reidun Cargo, 
Operations and Investigation Relative Thereto,” 13 November 
1935 (classified). 


38 


28. Memorandum of Conversation with Mr. Graves, 3 December 

1935 (classified). 

29. Memorandum from Chief Intelligence Officer, USCG, to Intel¬ 
ligence Officer, New York. “Black Radio Intercepts,” 15 March 

1935. 

30. Memorandum from Commander S. S. Yeandle, “False State¬ 
ments in Inward Reports of British Motor Vessels,” 27 January 

1936. The quote from Master Lohnes’ report and the details of 
the true voyage of the Miserinko are from the same memorandum. 

31. Memorandum from Commander Yeandle, “Proposed Confer¬ 
ence at Ottawa between Treasury Department and RCMP Offi¬ 
cials,’^? January 1936. 

32. Memorandum from Commander Yeandle to the Chief of the 
Division of Intelligence, “Royal Canadian Mounted Police; coop¬ 
eration with,” 15 June 1936. 

33. Letter from Commander Parker to Commander Yeandle, 13 June 

1936 (classified). 

34. Memorandum from Yeandle to Chief, U.S. Coast Guard Divi¬ 
sion of Intelligence. “Information Regarding Smuggling off Nova 
Scotia,” 14 August 1936. 

35. Memorandum from Clinton K. MacEachran, U.S. Consul Gen¬ 
eral, Halifax, NS, to the Secretary of State, “Conference at Halifax 
Concerning Liquor Activities,” 30 July 1938 (classified). 

36. Letters from F. J. Meade, Commander “H” Division, RCMP, to 
Commander S. S. Yeandle, “Re: Cryptography-RCMP Marine 
Section,” 27 September and 25 October 1938 (classified). Let¬ 
ter from Yeandle to Pollio, 18 October 1938: memorandum from 
Intelligence Officer, New York Division, to Chief Intelligence 
Officer, “RCMP Request for Training of Personnel,” 18 October 
1938; letter from Pollio to Yeandle, 24 October 1938 (classified); 
and memorandum from J. F. Jacot, Acting Intelligence Officer, 
New York Division, to Chief Intelligence Officer, “RCMP Per¬ 
sonnel; Instruction in Cryptography,” 1 November 1938. 


39 


37. Memorandum for the Secretary of the Treasury from the Com¬ 
mandant, USCG, 16 November 1938. 

38. Memorandum from Commander J. F. Farley, USCG, to Com¬ 
mander John R. Redman, Office of Naval Communications, 6 
March 1942 (classified). 

39. Ibid. 


40 




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